responsible person

Many taxpayers don’t realize that in their capacity as an officer, director or employee of a corporation, or employee or manager of a partnership or LLC, certain liability may arise related to the payment of New York sales taxes. This means that if a taxpayer possesses a duty to act on behalf of the business entity, and such duty includes compliance with the payment of sales taxes, they may be held personally liable for a failure to pay sales tax collected or required to be collected by the business enterprise.

The IRS utilizes a very broad definition of “responsible person” in the context of trust fund recovery penalties. The term, which may extend to more than one party within a corporation, partnership or LLC, applies to any person who willfully fails to perform a duty to pay trust fund taxes. It may be a corporate officer, director, employee, or shareholder, as well as a manager, employee, or member of a limited liability company. If a person is in any of the aforementioned positions where he or she controls a business’s financial affairs, liability as a responsible person for trust fund recovery penalties is a genuine possibility.